Stocks Gain as Earnings Roll In; Dollar Steadies: Markets Wrap

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Global stocks advanced following the latest set of corporate results, with U.S. stocks headed for fresh records before Apple Inc.’s earnings later Tuesday. The dollar edged higher after a fifth straight monthly decline even as data showed consumer spending lost momentum in June.

The Dow Jones Industrial Average flirted with crossing above 22,000 for the first time and tech shares pushed higher before the world’s largest company discloses results. The Stoxx Europe 600 Index headed for the first gain in four days after companies including BP Plc beat estimates. The dollar’s advance led to some weakness in commodities, with crude retreating after topping $50 a barrel.

As economic data largely supports the global growth story and company earnings in many cases beat estimates, investors will be forgiven for diving further into a bull market that’s propelled equity markets the world over to unprecedented levels. But with valuations well above average, monetary policy poised to turn hawkish and a U.S. administration mired in controversy there remains a degree of caution in markets.

Figures from gross domestic product and economic confidence to joblessness and manufacturing output signaled the euro-area economy was gaining steam, but it wasn’t enough to reverse a drop in the euro and most benchmark government bonds rose.

Christopher Grisanti, founder at Grisanti Capital Management, warns of a market bubble driven by investor exuberance.

(Source: Bloomberg)

Terminal users can read more in our Markets Live blog.

Meanwhile, the Reserve Bank of Australia held the benchmark at 1.5 percent while warning that a rising currency is expected to subdue inflation and weigh on the outlook for growth and employment. The Aussie fluctuated, dipping below 80 U.S. cents and jumping as high as 80.43 cents.

Here are some key upcoming events:

  • Apple earnings hit after the U.S. close. Analysts expect a somewhat cautious outlook due to potential delays in the new iPhone introduction.
  • Brazil’s Congress votes on Wednesday on whether to put President Michel Temer on trial.
  • Bank of England Governor Mark Carney may signal a more hawkish tone at its quarterly Inflation Report on Thursday. The central bank will likely keep rates on hold.
  • U.S. jobs data will probably show employers added about 180,000 workers in July. That’s Friday.
  • Rate decisions are due in India (Wednesday), Czech Republic and Ukraine (Thursday), and Romania (Friday).

And here are some of the key moves in markets:

Stocks

  • The S&P 500 Index rose 0.3 percent at 9:31 a.m. in New York. A close at that level would be a record.
  • The Dow average added almost 100 points to close in on the round-number milestone.
  • The MSCI All-Country World Index climbed 0.3 percent as of 8:37 a.m. in New York, the highest on record on a closing basis.
  • The Stoxx Europe 600 Index increased 0.5 percent.
  • The U.K.’s FTSE 100 Index jumped 0.8 percent, the biggest increase in almost three weeks.
  • Germany’s DAX Index jumped 0.7 percent, the largest climb in almost three weeks.
  • The MSCI Emerging Market Index gained 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index advanced 0.1 percent to 1,154.53.
  • The euro decreased 0.2 percent to $1.1817.
  • The British pound declined less than 0.05 percent to $1.3213.

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 2.30 percent.
  • Germany’s 10-year yield decreased two basis points to 0.53 percent, the lowest in more than a week.
  • Britain’s 10-year yield gained less than one basis point to 1.234 percent, the highest in a week.

Commodities

  • West Texas Intermediate crude fell 0.6 percent to $49.86 a barrel, the first retreat in more than a week.
  • Gold fell 0.2 percent to $1,266.84 an ounce, the biggest fall in a week.
  • Iron ore climbed 3.4 percent to 574 yuan per metric ton, the highest in more than four months.

Asia

  • The MSCI Asia-Pacific Index rose to the highest since 2007 as equity indexes from Tokyo to Sydney advanced. Japan’s Topix index added 0.6 percent. Banks rallied after Sumitomo Mitsui Financial Group Inc. reported a 31 percent increase in net income for the June quarter. 
  • Australia’s S&P/ASX 200 Index closed 0.9 percent higher, while South Korea’s Kospi index ended up 0.8 percent.
  • The Hang Seng Index in Hong Kong rose 0.8 percent, while the Shanghai Composite Index climbed 0.6 percent.
  • The yen fell 0.2 percent to 110.49 per dollar, having climbed 1.9 percent in July.
  • The Aussie dollar slipped 0.3 percent to 79.77 cents.

— With assistance by Adam Haigh

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